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Wall Street Opens Lower, Trims Losses as CPI Surge Intensifies Rate Fears

Published 02/10/2022, 09:30 AM
Updated 02/10/2022, 09:38 AM
© Reuters

© Reuters

By Geoffrey Smith 

Investing.com -- U.S. stock markets opened sharply lower on Thursday after a new 40-year record high for U.S. inflation stoked fears that the Federal Reserve will have to raise interest rates repeatedly this year. 

By 9:35 AM ET (1435 GMT), the Dow Jones Industrial Average was down 281 points, or 0.8% at 35,487 points. The S&P 500 was down 1.1% and the Nasdaq Composite, which has traded more sensitively to interest rate expectations in recent weeks, was down 1.5%.

Earlier, official statistics showed the consumer price index rose 0.6% on the month and 7.5% on the year, its highest since 1982. The rise in prices was broad-based, with the majority of sub-categories for various goods and services showing an inflation rate of over 5%.

"It isn't just the rate that should be worrying the Federal Reserve, but also the breadth of corporate pricing power," said James Knightley, chief international economist with ING, in a note to clients.

The labor market, too, showed further signs of having ridden out disruptions from the wave of Omicron-variant Covid-19 quickly, with initial jobless claims falling by more than expected last week to 223,000.

However, the market trimmed its losses later, on the perception that the numbers, while bad, won't be bad enough to lead the Fed to raise the target rate for Fed Funds by 50 basis points next month, as some have suggested. Cleveland Fed President Loretta Mester - one of the voting members of the Federal Open Markets Committee this year -  had said on Wednesday that she didn't see a "compelling reason" for such a step.

The figures were a disappointment to the bond market too, pushing yields (which move inversely to prices) at the long end of the curve up by around 5-6 basis points. The benchmark 10-Year Treasury note yield, which had fallen on Wednesday after a well-received auction, rose to 2.00% for the first time since August 2019.

The selling wasn't so indiscriminate as to stand in the way of those companies who reported strong earnings overnight or before the opening, however. Twilio (NYSE:TWLO) stock rose 9.1% and Datadog (NASDAQ:DDOG) stock rose by 12.2% after well-received updates, while Walt Disney (NYSE:DIS) stock also rose by  5.1% to its highest in a month after the entertainment giant said it gained 11.8 million new subscribers for its Disney+ service in the holiday quarter. That came at a cost, however, with the unit that houses the streaming service losing nearly $600 million in the quarter. The losses were bankrolled largely by the company's theme park division, which was able to operate almost completely without Covid restrictions in the quarter.

Uber stock was another gainer, after its latest quarterly numbers showed sustained strong revenue growth in its food delivery business despite the reopening of restaurants, while its passenger numbers also increased. The company's forecasts for the current quarter were below consensus forecasts, however. Uber (NYSE:UBER) stock rose 5.1% to a one-month high.

 

Latest comments

so we tailspin on regurgitation of a january 12th statement?bullard needs investigated.
Down down we go future is bad and very negative
SP is not market now is a biggest circus ever
Once in a lifetime Great Depression style crash here we go!
And the knife catchers take the stage, as the criminal comedy called the US Ponzi Scheme continues.  Charles Ponzi would cry tears of joy if he could see the ultimate incarnation of his work in action.
It's extraordinary that stocks sell off on high CPI yet the dxy barely moves.
Doesn't make sense. We all know it's fraud and manipulation. Its just running out of time because it's falling apart due to sickening greed
It is plateauing, it will deflate soon.
high bond rates and high inflation ....going to new normal
Today try to stop the big fall... Tomorrow keep falling down the rabbit hole...
Are you suggesting, in a round about way, that investors should be fleeing stocks for real assets like Gold??
"Stocks trim losses," one of the most prolific headlines in internet news history.  Second only to "stocks recover in late trade."  Routine, uninhibited "rally" yesterday, followed by another round if miraculous intraday spikes and more loss mitigation.  Fraudulent, criminally manipulated JOKE.  The greatest crime spree in decades extends to day 14.  Assume the proper position America.
you forgot digesting investors.
I just keep riding the escalator. If I don't I will miss out on the inflation driven market cap rise. I will at best break even in real terms but if I sell then where would I put the money? Bond values are tanking at a real rate that is double that of inflation and cash is losing at the inflation rate. We have to ride the bull till the horn sounds. But the yearly MACD is on the verge of crossing which is signaling the end of this inflation driven market climb and when stocks tank, consumer spending will soon follow and high inflation will end.
Can someone explain me why do we see a rally on EUR and GBP on expectations of FED 0.5% rate hike?
In a word, "FRAUD"
Attention Bag holders. Good luck buying this dip. NASDAQ will drop at least 500 tonight.
I think it's time to adopt are primitive life again. seems like being smart only brought us till here.. and it's not worth it. modern life is chaotic.. time to go to a far off farmland and enjoy life while I still have lords mercy on me until I become a fossil..
Stick a fork in me! Everywhere around us AI and liberal media feed the false narrative while computers manipulate stock trading. This morning, my wife was listening to 5 Things and the commentator said gas prices were already coming down and other inflation would ease shortly. CNBC would not state the inflation number, just the estimates. I hear and see Horse Pucky at every turn. The establishment declares that we ignore reality and drink the Koolaid!!
it's clear the markets are not going up or down by being logical.. it's never been rational ever since markets were formed so how will a 4 decades high inflation will matter .. it's only the elite who will make you dance on their tune until the world collectively doesn't stand up and show them their worth.. orelse stop talking about being fair equal and just
Markets seem to calculating multiple 'controlled' rises in interest rates whilst holding onto the hope that the crux of inflation currently is short term through supply chain bottlenecks (and accounting for print go brrr). A wrong move or continuation when supply chain pressures ease and it's a bit disturbing.
This market doesn’t react to data anymore. Close your eyes and buy the dip ☺️
0.5% down on highest inflation in 4 decades 🤪🎉🤪🎉😂
Inflation is higher and yet market participants rushed in to buy the dip at 9:30--this makes no sense.
if the market was easy to figure out, everyone would be rich.
more likely institutions are buying but for one main reason, they HAVE to buy..they have too much capital to just sit in cash.
hard to concentrate when all you can think of is russia, Russia, russia.
Another thing for Joe to ignore.
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